tv Nightly Business Report PBS August 20, 2009 1:00am-1:30am EDT
captiong sponsored by wpbt >> paul: while consumersill see the firssigns of the biggest overhaul of e credit card indtry in two decades, tomorrowmany are already tting hit with rate changes and account closur. tonight, a looat the new provisions. >> susie: the headf whole foods lands in the middle ofhe health care dete, saying healthare is not an intrinsic right. but his viewaren't jiving with some of the organic grocer'sie hard customers >> pau tonight's "street critique" guest sees performce anxiety grippi the markets thisall. he's doug roberts of channel capital research a he'll explain. >> the idea s to create a centralizetransparent place for buyers and sellers to co together to sellssets that they can't sell onhe public exchanges or oer types of platrms. >> susie: he's talkingbout second marke
we profilehe market maker for ha to trade securities including california iou's >> paul: i'm pl kangas. >> sus: and i'm susie gharib. this is "nightly busins report" for weesday, august 19 "nightlyusiness report" is made possible by: this progr was made possible by contributions to yourbs station fr viewers like you. thank you. 7//& >> susie: good evening eryone. the intern revenue service day lifted the veil of secre on a major swissank. the names of,500 americans wi accounts at u.b.s. were handed over to the taxn.
those clients are spected of hidingheir assets and evading u.s. taxes. atne time, those accounts held more than $18 billn. a tentative deal waseached between u.s. and the i.r.s. last week. but e details weren't made public until now. irs commsioner doug shulman says the agreement sends a strong message to l americans, incling tax chts. >>e will use all of the enforcement tools at our disposal to pursueou. for honest hard workineveryday american school teachers, firemen policemen who patheir taxes. the message is alsthere. wealthy ople can't skirt the rules and hide assets. we a going to insure that everyone pays their fairhare of taxes. >> susie: eaking of fair shareslate this afternoon, the swiss government annoued its selling itstake in u.b.s. thswiss hope to recoup more th $5.5 billion on that sale.
and anges are coming tomorrow for american consume. thanks to the credit caract of 2009, a neset of rules goes into effect. includin the ability to reject rate increases. but as jeff yastinreports, it's alrdy having some untended consequences. reporter: across the countr right now, therere thousands of pple just like kirk arthur. he keeps several cret cards. and when he atteted to make a smalpurchase with one of them last weekend, he found it was canceled wiout any advance tice. >> there'shat feeling of emrrassment. you feel, oh, wh did i do wrong? d then i got angry because i knew i hadn't do anything wrong. anthat was the disconnect. i've been a good custor. i pay my balans off on time. >> reporr: arthur's cancellation comes as pa of an industry-wide movemento get out ahead the credit card act of 2009. curtis arnold, founder o
cardratings.com, saythe number of accnts being cancelled or switched to variable res has surged in cent weeks. >> this is crazy unprecedentethings that are ppening right now. probably a worsease scenario exame. not happening to mlions and millio of account holders, but it is starting to ppen, and we're aring about it andotally. >> reporter: starting tomorr, consers will now get their statements 21 da before paent's due, instead of the current 14 days. and card issuers wilhave to give at ast 45 days advance notice to te hikes, instead of 15-days now. a second phase of changes mes in february th even more prottions for card users. bankrate.com's leslimcfadden sa the law is forcing adjustments on issue and consumers ale. we're weather r we're ready seeing credit going down, minimum score requirements
going up. so there are some negative coequences, but i'm glad to see that consumers have more prottions on their credit cards. >> reporter: consumersho tend to carryarge balances, or have inactive accounts, were st likely to see card cancellations. experts say paying down bances will lower t probability of eing a no-notice cancellatio but as kirk arth's experience shs, no one's immune as card users and card issue adjust to the ne more regulated ndscape of consumer credit. jeff yastine, nighy business reportmiami. >>aul: wall street opened lower in reaction toelloffs in overse markets, especially china, as concerns persisted that glol stocks are over- priced. 30 mines into trading, the dow posted modest 33 point loss and the nasdaq was off 9oints. the mild early downtur attracted buyers then a surge in oil fures on ws of a drop in crude inventories trigred aggressive buyingn the energy sector and that bing in energy helped the neral market close in positive territory.
>> susie: a birtisan group of senators isn'taiting until the summ recess is over to get back to work on health ce reform. nance committee chairman max baucus sd his group of three democrats and three republics wi continue working tomorrow over the phone. and he tnks they'll defy skeptics by reacng a
compromi that can pass the full senate this fall. >> susie: but the c.e. of whole foods speaking out agait health care reform. john mackey says the obama reform pn would become maive entitlement program. heaid out his views last week in a hhly critical op-ed piece in the "wall street jonal." as stephaniehue reports, those views have landed him in a hp of troub, with some loyal customers. >> repter: whole foods is better known for its organic and natural products tn for its politi. the brand appeals tohoppers who want sustainableeafood and enviroentally friendly foods. buc.e.o. johmackey's editorial against so-cald obamacarhas tarnished the chain for people like mark rosenthal. he started a "boycott whole foods" group for pple who disagreeith the c.e.o.'s alth care views. >> whole foods built tir brand on oering progessives, especially era value for their product, cut therinciples that
mackey was espousi. make me think, this is not t company i thoughi was supporting. >> rorter: the group, started last friday, alreadyas 16 thsand members on facebook and is also spreading e word on twitte at first whole foods resnded that the op- was mackey's peonal view. but in a stateme today, the company says it branng expert robert passikoff says t emotional reaction to thc.e.o.'s op-ed will cost the company. >> these days, in is economy, a loyal customer c be worth ite a bit of money, if you even just extrapate out against e people who felt angry enough to list the names on the facebk boycott page and ltiply that out times their weeklyuys, that adds up to a lot of money. >> reporter: financial analys doubt the ise will derail the company's long term prospect
manyhoppers, like erin gray, won't change their shoing habits. >> it'almost unamerican to boycott somethinsimply because you disaee with what they have to say, as long as what sobody saying is nooffensive then i don't see the pot in a boycott. >> reporter: whole foods is already grappling th selling premiuproducts in a recession economy. anysts say while this may not have a huge impact, it w't help. stephanie dhue"nightly businesseport", washington. >> paul: it's been said th at some price, y trade will clea t that doesn't always mean it's easy to match slers with would- buyers. now thers a new marketplace which hopeto be the match- ker for those tough trades. scott gurvey takes look. >> reporr: got a white elhant you'd like to get rid of? thiss the place to bring it. secondarket looks like your standard wall street trang floor. but it brings together bers and sellers wiing to trade otheise illiquid assets. bay silbert founded second market 2004.
>> we stard off with something called restricted stock an warrants in publ companies. and then wadded eight new markets over the past ur years ranging fr something called auction rate securities private mpany stock and even recently the california i.u.s. >> reporter: this is not ey. buyers must et regulatory stdards for sophisticated inveors, those permitted to buy unlisted securitie cond market works cooperatively with the.e.c., finra, sipand other regulars. and it arrans the escrow and gal paperwork on all sales. seco market collects a transaction fee on successfu trad, making twenty million dollars in 2008 on 1 bilon dollars worth transactions. >> there's trillio of dollars of iiquid assets out there. we're involvedn things like e toxic assets which are mortgage backed securies and c.d.o.s. anjust because they're illiquid doesn't meathat they're distssed or not a good investment. so things like priva company stock, which is going be an active mart for us in good times and batimes will
obviously improve ashe economy improves, whereas the xic assets we ceainly hope to help clean out the system and the moven. >> reporter:im connolly of coorate strategies turned to second market when hneeded to raise sh for the family trust and pension funds he mages. the asts were auction rate securities but, because ofhe credit market freeze, therwere no auctions. second mket found a buyer in two weeks. >>n this case, it was a buyer who managed a large mber of i.r.a.s and the peoplen the i.r.a.s got a tremendous dl because the i.a.s can be patient and th was pension planoney that could wait to be paid off. soll these i.r.a.s got it at discount, they got small fee anwe got our liquidity back. it workejust perfectly. >> rorter: there are no financial restrictions on sellers, but ocourse some assets are still me illiquid than oers. >> we get inquiries ofeople trying to sell things raing
from an ice skating rinko asts, mines in siberia, fortunately, we have buys for lots of asts, unfortunately, some of the more uque one we don't have buys for, not yet. >> reporter:hich is a shame because i have a bdge i'd like to sl. scott gurvey, "nhtly business rert", new york. >> susie: ansportation secretary ray laod promised day that auto dealers participating in "cashor clunkers" wille paid. e comments came as a new yor dealer group said lf of its 425 memberhave pulled out of
the prram, because they haven't be reimbursed. so far only about 2%f clunkers claims have been paid. lahood blames e delays on paperwork mistakesnd a shortage of aff to process the claims. the secrary also said, later this weehe'll detail plans for winding down the %billion program. meanwhile, cysler is winding down its letime warranties arting with its new 2010 models. instead, the aomaker will prove 5-year, 100,000 mile warranties. the move was prompted customer consion and the inabity to transfer the rranty if a used car was sold to another buyer. the new offer covers neay all vehicles with thexception of a few commercial and dsel- powered truc. chryslerontinues to struggle to persuade car shoppers tbuy its vehicles rit now, the best-selling cars inhe "cash for clunkers" program e toyotas and hondas. paul? >> pl: susie, chrysler does make the jeecherokee. it's one othe most popular clunkers, being trad in for a rebate
>> paul: tight's "street critiqueguest says right now the markets are particarly susctible to bad news even with the economic optimi we've been seein he's dg roberts chief vestment strategist at chann capital researchnd author of "folw the fed to investment success." doug welcome to e program. >> thank y, paul. >> paul: on wall street we saw biselling on monda followed byodest comebacks yesterday and toda what is your take on t current market? >> right now we've come a long
extremel, from a period in degree of pessimism. people thoht the world was falling apart. now we've bee fueled by basically better than expected earnings and als better than expected economic news. although the aoluteews hasn't been particulay good, it has been bter than expected we're now seeing a few chings in the armor that are appearing as news throws doubt on the question. the question is w much of a boce we'll be geling, and that's what you're sing over the la couple days. paul: soou're not a full-fledged bl by any means, are you? >> no. i thini can be bullish short-te. but i think long-term these problems wl take time to work out. paulds i under you're expecting the markets to suffer fro performan anxiety th paul. what do you mean that? >> performance anxie means that the market tends go up, you're go to have a money manars who will be forced to participate this to keep theijobs of there's a saying
on wall stre that if you' do when everybody else is do you're not going toet rt. hower if you're down or lagging when everybody else is outpofing, that'a real danger to yo job so, you may have a lot of moy managers who are ford to buy into this market. if it ctinues to go up. even if they reay don't believe that this is lasti rally. >> paul:nterestingand i thk you're right on target there. tell me about wt you call yo three bket approh to investing, what ishat? >> well, in this type o environment where there's a high degree of uncertainty, i believe that investors are to divideheir money into three buckets. the first bucket is money that you need immediately,nd that should be revery safe, and concerned more with preservation of pital and return of capital thaneturn on capital. then you he your long-term money whiccan be a bit more aggressive and long-term wh. then the thirdbucket is reallyoney that you have in the middle and you have view tha as more trading money, money that you're going to takprofits muchore
quickly ashey arise. >> paul: with at in min, what is the favorite sector at you have right n in t stock market? >> right now i believe this is agovernment trade, really areas that will than benefiting from the government involvement in the economy. which is increangly on life support with govement help, and that's really tecology, since technology benefits from really the fact that you can replace jobs with softre, with technology solutions, and that's auch cheaper alternative. i think that's going to continue. also you've seenn health care really that's again a government foc, and rht nowhe pharmaceutical indust has determined tha th can make money this environment by lering their marketing cos. >> paul: so technology and heth care. pharceuticals. >>xactly. paul: very good, doug, our time is up but i want to thank you r being with us. >>hank you, pl, for having me on. >> paul: my guest, douroberts, chief instment strategist at channel capital research.
>>usie: tomorrow, 1.5 million americans may soonose their employment benefits, but onl 60% of the out owork are covered. we'll explain. >> susie: james lockhartthe former head the agency that pervised fannie mae and freddie mac, is now a rnaround speciali. he is joining wloss and company,he new york firm known for restructurings a buyouts. until o weeks ago, lockhart oversaw fannie and fredd as they emerged from acunting andals and guided them as th became gernment-chartered companies. paul: the food and drug administration is launing its center f tobacco products. today,he agency announced that doctor lawrence deytonill head that newivision. he was thehief public health officer for veterans affairs deyton's departmt will monitor tobacco advertisinand promotions and fus on stopping the illegal ses of cigarettesnd other tobacco oducts to kids. euu
>> susie: in the money file tonighsome thoughts on osting the nation's savings rate. re's jason zweig, personal finance columnist athe "wall street jrnal." if the economy is to recove saving will haveo become easier. the personal sing rate has offially risen to around 5% after hovering close tzero for years.
but, accding to the federal reserve, only 57% of amerin families savedny money in 2007 here are a f ideas that might help. tarefunds automatically invested in i.r.a.s all x refunds could automatically insted in an ira unless the taxpayer chose to ta the refund in ca instead. the moy could go into cheap stock and bond index fun modeled after ththrift savings pl used by federal workers. taxpays would be free to transfer to another i.r.a. a any time, but eay withdrawals wod be penalized. congress should crea d.i.y., or develop & invest yourself, accoun. d.i.y.s would be availableo any household rning less than e u.s. median income current around $50,000. contributions, gwth and withdraws would all be free of any income tax. the proceeds could bspent only on edution or vocational training, buying a home or starting a new busins. anthe u.s. should revive the thrift stamps that eouraged savings ring world war i. in tiny increments o25 cents
each, save filled a card with $4 worth of thrift stamps. fillg 20 cards entitled them to a little bondhat paid roughly 3% intest and was wort$100 five years later. 1918 alone, americans saved $1.6 billion thiway or nearly 23 bilon in today's dollars, 25 cents at a time. savingore is all about making it easier for ople to spend le. i'm jason zwei >>usie: and finally tonight, forbes magazine is o with its annualist of the world's most powerful women. eight out of the top tenre e.o.'s, while two work in government. angela merkel, germany's chancellor tops the listor the fourth concutive year. f.d.i.c. cirman sheila bair is the runner up, for her leadership role duringhe current econom crisis. also in the p five are: l 3 were also on last year's top ten list. and the e.o.'s of kraft foods, dupont, wellpoint, arevand sunoco round o the top ten list